Unsecured creditor claims against failed builder Ebert Construction have climbed to $108 million, according to an update just issued, which puts the failure second only to Mainzeal's $110m losses.
Ebert's six-monthly liquidators' report from BDO's Iain Shephard and Jessica Kellow has revealed the scope of the collapse is much larger than previously thought.
"The liquidators have received 336 unsecured claims totalling $108,769,292," they say.
When $9.5m of secured creditor claims are included, Ebert's total claims stand at $117m but the liquidators did not add the two figures together.
No figure has ever emerged as high as that before, with Ebert's trade claims on its own books last year estimated at just $34m.
Although the liquidators didn't specifically mention it, Mainzeal failed in 2013 with losses of $110m, only $2m more than the Ebert unsecured creditor claims.
The liquidators' new figure puts Ebert's failure towards the top end of New Zealand construction financial collapses, causing so many issues and leaving so many parties unpaid.
Fletcher Construction last year estimated losses of nearly $1b on its major building projects but it remains solvent, is continuing to work and completing those jobs where it has suffered multi-million dollar losses including the NZ International Convention Centre and Commercial Bay.
Just four days ago, the Herald reported how previous Ebert accounts filed last year showed a much lower figure. The company's accounting records as at July 31, 2018 reported unsecured trade creditors of $33.84m comprising accounts payable ($24.52m including GST) and retentions ($8.32m excluding GST), that story said, citing the new six-monthly receivers' report on Ebert.
The liquidators' report has the higher figure.
Ebert was working on 15 projects when it failed, including the large Union Green apartments on Union St in Auckland. That project has since been taken over by Dominion Constructors and buyers hope their places will be finished next year, although the site lay idle for months.
And worse news was delivered: even those parties with registered securities over the business won't see a cent.
"The receivers have advised that there is likely to be a substantial shortfall to creditors with security interests and they do not anticipate any surplus funds being available to unsecured creditors from the receivership," the liquidators said, referring to the latest report issued on March 29 from receivers Lara Bennett, John Fisk and Richard Longman at PwC.
A further blow: even secured creditors BNZ wanting $6m and Ebert's Kelvin Hale wanting $3.5m won't be paid: "The receivers have advised that there is likely to be a substantial shortfall to creditors with security interests and they do not anticipate any surplus funds being available to unsecured creditors from the receivership," the liquidators said.
Ebert being sued
Add to this legal issues: principals and developers who employed Ebert to work on construction projects are now taking legal action for the failure.
"The liquidators have received several large breaches of contract claims from contract principals," the report said.
Breach of directors' duties?
There's also the issue of whether Ebert's three directors broke the law: investigations are continuing but the liquidators raised serious concerns about what those three directors did.
"The liquidators are continuing to pursue numerous areas of investigation. They have formed a preliminary view that there may have been breaches of directors' duties and have put the directors on notice of a potential claim," the liquidators said.
Directors are Kelvin Eric Hale of Walter Rd, Lowry Bay, Lower Hutt, Nigel Boyd Foster of Shirley St, Karori, Wellington and Lawrence Michael Phillips of Dublin Bay Rd in Wanaka.
Unpaid employee sum breaches law
Unpaid employees are owed so much that it breaches the law.... "$757,056 relating to employee entitlements that are in excess of the statutory preferential limit prescribed by the [Companies] Act".
Then there's the tax issue: "Inland Revenue Department has filed a preferential claim in the amount of $1,019,768."
No end is in sight: "It is not practical to estimate the date of the completion of the liquidation at this stage," the liquidators concluded.
• Founded 1999;
• Failed July, 2018;
• Receivers then appointed;
• 15 active sites;
• Liquidators appointed October, 2018;
• Six-monthly liquidation report out;
• Unsecured claims $108m;
• Secured claims $9.5m;
Total claims: $117m